Safest bet there was

The Recanati family is mad. Kardan's Grunfeld can afford to smile

Oudi Recanati is mad and Leon Recanati is mad ¿ in fact, many people in the Recanati family are mad, and they are mad at Joseph Grunfeld, controlling shareholder in Kardan (TASE: KRDN ) , who ducked out of the IDB Holding Corporation (TASE: IDBH ) takeover deal at the last possible minute. Kardan, with its Australian partners the Lowy family, was supposed to buy $312 million in IDB shares.

Oudi Recanati and the rest of the family thought they were going to sell their shares for lots of cold hard cash and now they are stuck with shares it is doubtful they will be able to sell at the high price set in the original deal.

Leon Recanati, who was to acquire control of IDB with Grunfeld, thought he was already in the driver's seat and could start the much-needed restructuring of the company. Now he is back where he was a year ago: back in partnership with his cousin Oudi, and everyone can see they don¿t want to be in business together, leaving IDB's future hazy.

And now the Recanatis will have another reason to get mad when Kardan publishes its 2001 financials. It will then be clear that Grunfeld didn't just ditch them on their way to the altar, but that doing so was the best deal he's made his entire life.

It all begins and ends with Kardan¿s decision not to take too many financial chances and "hedge", take out financial insurance on the IDB takeover deal. Since the price of the IDB acquisition was set in dollars, Kardan took out insurance against a rapid dollar revaluation since shekel devaluation would raise IDB's price for them, while it was not clear that the value of the asset would increase accordingly.